Day of The Long Tail . . .

> Yesterday’s Travel Agency disintermediated by the Internet could very well be tomorrow’s Real Estate Agency, couldn’t it?

That’s a great question. I have written about this a lot. If you’ll indulge me, I’d like to quote from one of the earliest posts I did on BloodhoundBlog. I thought — and still think — it was important, but we weren’t getting any attention at the time.

What’s interesting to me – fascinating to me, a full-time obsession for me – is the idea that real estate marketing is somehow imperiled by internet-based disintermediation.

First, what is being done on the internet, so far at least, is not marketing. It’s listing, at best, the compilation of baseball-card-like stats, and if Realtors conflate the two, it’s because they have never understood marketing to begin with. “The houses sell themselves,” we say to ourselves, and there is a truth to this. If you take buyers where they want to be, they’ll pay to stay there. In crucial respects, buyer representation is the easiest sale in the history of sales. In other respects, it’s impossibly hard, of course, which is why the failure rate among Realtors is so high. But, unlike virtually every other type of sales, you do not have to convince the client to want your product before you can attempt to sell it. Arguably, internet-based business models can help buyers pre-screen properties they might be interested in. From there – if the buyers are experienced, well-qualified and game to hold their own hands – the actual process of transferring title can be managed by a title company. In general, buyers want a lot more service than this, which is why Realtors working with buyers can breathe easily, at least for now, so long as the sellers are willing to pay sales commissions.

But second, most of what has been done by Realtors representing sellers is not marketing, either. It’s listing, at best, the compilation of baseball-card-like stats. Realtors conflate the two because they have never understood marketing to begin with. We each of us have our shortcomings, but a shortcoming that is epidemic in the National Association of Realtors, one which puts it at huge risk of internet disintermediation, is the inability or unwillingness to understand real estate as a business. The nature of the real estate licensing laws yields a population of real estate “professionals” who are diligent, hard-working amateurs at absolutely everything. This is not entirely awful. It’s a Jack-of-all-trades job, and an experienced Realtor brings a vast if fairly shallow pool of expertise to the transaction. But if the battle of the future is who can list disconnected features most rigorously – who can compile the most baseball cards – the file servers win hands-down.

That’s why Realtors want to – and should – talk about things file servers cannot do. But the most important thing a professional Realtor with a living mind can do, and a file server can never do, is market homes. The goal is not to clear the market. Anyone can do that by reducing the price until someone shouts, “Sold!” The goal is to sell the home in the optimum time-frame for the highest attainable price.

Doing that requires that a living mind have actual, first-hand experience of the home. This no file server can ever do, so the disintermediaries are bested on the ground. But this is not sufficient. If the Realtor is going to do no more than that which can be done on a remote file server – sloppily and haphazardly – the seller might as well go with the file server. The typical lock-box-and-a-prayer kind of MLS listing might work marginally better for now, but in the long run it won’t matter, particularly if aggregators are permitted to combine MLS listings with listings from other sources. In the battle of the baseball cards, the biggest shoe-box wins.

The point is this: If marketing a home is no more than compiling a baseball card, a table of stats to which the buyer must bring every bit of meaning, then the game is already lost. Representation can easily be uncoupled from the transaction – for example by fee-for-service billing, hourly billing or simply by taking the whole pile of paperwork to a title company or an attorney. But if marketing is more than this – and who with eyes can doubt that this is so? – then it is a skill that Realtors must master if they hope to survive.

Makes me smile. The Realtors we compete against sell features – baseball cards. The RealtyBots – small and pitiful for now, but inherently scalable – sell features. Anyone smart enough to sell the benefits of those features can beat them all, house by house. And if you can take it to the next level, to sell the story of the lives to be lived in that home, you can write your own ticket, at least with high-end properties. Representation of sellers matters – quite a bit more than is acknowledged. Expertise matters. Professionalism and follow-through matter a great deal. But what matters more than anything else is marketing. Realtors who master the art of marketing homes will be fine.

2 Comments

mike says:

Very interesting.

Yesterday’s Travel Agency disintermediated by the Internet could very well be tomorrow’s Real Estate Agency, couldn’t it?

August 6, 2006 — 8:38 pm
Comment by post author

Greg Swann says:

> Yesterday’s Travel Agency disintermediated by the Internet could very well be tomorrow’s Real Estate Agency, couldn’t it?

That’s a great question. I have written about this a lot. If you’ll indulge me, I’d like to quote from one of the earliest posts I did on BloodhoundBlog. I thought — and still think — it was important, but we weren’t getting any attention at the time.

What’s interesting to me – fascinating to me, a full-time obsession for me – is the idea that real estate marketing is somehow imperiled by internet-based disintermediation.

First, what is being done on the internet, so far at least, is not marketing. It’s listing, at best, the compilation of baseball-card-like stats, and if Realtors conflate the two, it’s because they have never understood marketing to begin with. “The houses sell themselves,” we say to ourselves, and there is a truth to this. If you take buyers where they want to be, they’ll pay to stay there. In crucial respects, buyer representation is the easiest sale in the history of sales. In other respects, it’s impossibly hard, of course, which is why the failure rate among Realtors is so high. But, unlike virtually every other type of sales, you do not have to convince the client to want your product before you can attempt to sell it. Arguably, internet-based business models can help buyers pre-screen properties they might be interested in. From there – if the buyers are experienced, well-qualified and game to hold their own hands – the actual process of transferring title can be managed by a title company. In general, buyers want a lot more service than this, which is why Realtors working with buyers can breathe easily, at least for now, so long as the sellers are willing to pay sales commissions.

But second, most of what has been done by Realtors representing sellers is not marketing, either. It’s listing, at best, the compilation of baseball-card-like stats. Realtors conflate the two because they have never understood marketing to begin with. We each of us have our shortcomings, but a shortcoming that is epidemic in the National Association of Realtors, one which puts it at huge risk of internet disintermediation, is the inability or unwillingness to understand real estate as a business. The nature of the real estate licensing laws yields a population of real estate “professionals” who are diligent, hard-working amateurs at absolutely everything. This is not entirely awful. It’s a Jack-of-all-trades job, and an experienced Realtor brings a vast if fairly shallow pool of expertise to the transaction. But if the battle of the future is who can list disconnected features most rigorously – who can compile the most baseball cards – the file servers win hands-down.

That’s why Realtors want to – and should – talk about things file servers cannot do. But the most important thing a professional Realtor with a living mind can do, and a file server can never do, is market homes. The goal is not to clear the market. Anyone can do that by reducing the price until someone shouts, “Sold!” The goal is to sell the home in the optimum time-frame for the highest attainable price.

Doing that requires that a living mind have actual, first-hand experience of the home. This no file server can ever do, so the disintermediaries are bested on the ground. But this is not sufficient. If the Realtor is going to do no more than that which can be done on a remote file server – sloppily and haphazardly – the seller might as well go with the file server. The typical lock-box-and-a-prayer kind of MLS listing might work marginally better for now, but in the long run it won’t matter, particularly if aggregators are permitted to combine MLS listings with listings from other sources. In the battle of the baseball cards, the biggest shoe-box wins.

The point is this: If marketing a home is no more than compiling a baseball card, a table of stats to which the buyer must bring every bit of meaning, then the game is already lost. Representation can easily be uncoupled from the transaction – for example by fee-for-service billing, hourly billing or simply by taking the whole pile of paperwork to a title company or an attorney. But if marketing is more than this – and who with eyes can doubt that this is so? – then it is a skill that Realtors must master if they hope to survive.

Makes me smile. The Realtors we compete against sell features – baseball cards. The RealtyBots – small and pitiful for now, but inherently scalable – sell features. Anyone smart enough to sell the benefits of those features can beat them all, house by house. And if you can take it to the next level, to sell the story of the lives to be lived in that home, you can write your own ticket, at least with high-end properties. Representation of sellers matters – quite a bit more than is acknowledged. Expertise matters. Professionalism and follow-through matter a great deal. But what matters more than anything else is marketing. Realtors who master the art of marketing homes will be fine.

August 6, 2006 — 9:37 pm

Day of The Long Tail . . .

by Greg Swann

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mike says:

Greg Swann says:

Greg Swann

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Day of The Long Tail . . .

by Greg Swann

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More to howl about...

2 Comments

mike says:

Greg Swann says:

Trulia trooper . . .

What’s wrong with real estate weblogs? I might run this way and that, but never hot and cold . . .

Greg Swann

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